The other day, Taoiseach Enda Kenny — aka Mr 93% — opined that he was pinning his election hopes on a major programme of job creation over the next five years.
He was no doubt thinking of the targets set for IDA Ireland-supported companies and for Enterprise Ireland. The ongoing success of the IDA, in particular, has been outstanding.
The IDA was instrumental in securing 19,000 new jobs through investments by multinational firms in Ireland in 2015. That many of those jobs were located outside of Dublin, underpinned the IDA’s success.
The IDA certainly proved that, all things being equal, it’s easier to make a sale to an existing company than it is to make sales to a new one. Of the investments it recorded last year, just over half were for investments in existing Irish-based facilities.
The importance of FDI to the Irish economy is such that almost one in five private sector workers are employed in multinational companies in Ireland.
Moreover, given Government commitments for future jobs, it’s also good news that the IDA has advised that site visits in 2015 had increased over the previous year.
As we are all aware, this governing Coalition are not pinning their hopes on FDI alone.
The range of goodies already on offer and the benefits that have been promised should they be re-elected are also on the table. The Government believes that it’s had a very good year. The amount it collected in corporation tax surpassed expectations by almost €2.3 billion.
Overall, the Government collected €3.5bn more from all taxes last year, but the bounty from corporation tax receipts was, amazingly and still mysteriously, over 50% more than it had anticipated. While the EU demurred somewhat from giving its full support in its recent report on Ireland and the Government’s expansionist budget, it did not demand it to be changed.
The euro is historically very cheap against the dollar and sterling, making Irish exports of goods and services, including inward tourism, great value.
The question we should ask ourselves is whether these advantages can last? The answer has to be that there are just too many known unknowns. For the first time, many of us have begun to realise that the world economic system is inextricably tied together.
The current volatility of the Chinese economy has had repercussions right across the globe. Its problems have not gone away.
Indeed, there are those who suggest that China’s ambitious forays into the South China Sea have more to do with its desire to divert the attention of its citizens from the economic sphere and onto its nationalistic foreign adventures.
Closer to home, there is the possibility that our nearest neighbour and one of our biggest trading partners will leave the EU. Britain’s potential exit from the EU, known as ‘Brexit’, may not be a certainty but it is certainly a possibility and it is an outcome that we should fear. The British are exasperated with the ham-fisted performance of its would-be masters in Brussels — not just over the migrants’ crisis but over a host of issues.
Some of those favouring a Brexit hope the EU will strike a deal with Britain that would mean there would be only a minimal difference between Britain staying in and Britain leaving the EU. Given the rancour, we must conclude that there exists a serious risk to the Irish economy. It also has implications for the common travel area.
We need to keep an eagle eye on events in Brussels and the EU. The review of our tax arrangements with Apple has not gone away. In addition, the EU is trying to arbitrarily find a way to ensure corporation tax is paid where the product is sold and not where the product is made. Should either of these issues not go our way we may lose those multinational companies which are so important to our economic well being.
The last thing we need is an outcome where Brexit becomes a reality and FDI decides Ireland is no longer the place to be. Going into this election, Government should be very wary of the risks in trying to get itself re-elected. It could well be playing Russian roulette with all of our futures.
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